Digital infrastructure development and regional market segmentation: New evidence from the “Broadband China” policy
Li Zhou, Guangcheng Wei, Jiayu Wan, Qiang Gao
Keywords:
digital infrastructure construction; regional market segmentation; Broadband China; time-varying in-Difference-in-Difference-in-Difference
Abstract:
Regional market segmentation (SEG) has hindered China’s high-quality economic development, while digital infrastructure construction (DIC) can accelerate intraregional factor mobility, which is crucial to breaking down SEG. Using panel data from 110 prefecture-level cities in the Yangtze River Economic Belt of China from 2011 to 2021, this study analyzes the impact of DIC on regional SEG, employing a time-varying difference-in-differences model, and treating the “Broadband China” pilot policy as a quasi-natural experiment. The results reveal that DIC significantly mitigates regional SEG, and this conclusion remains valid following a series of model validity and robustness tests. The mechanism analysis confirms that DIC reduces regional SEG by enhancing urban market potential and fostering technological innovation. Heterogeneity analysis shows that the mitigating effects of DIC on regional SEG are particularly pronounced in cities characterized by high information search costs, a low digital divide, low market concentration, and particularly among small and mid- to lower-tier cities. The results provide crucial insights concerning the positive impact of DIC, which is essential for accelerating China’s transition to a new development pattern that emphasizes a strong domestic market and for strategically implementing differentiated policies.
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 Digital infrastructure development and regional market segmentation: New evidence from the “Broadband China” policy [PDF file] [Filesize: 803.81 KB]
 10.7441/joc.2025.01.07
Zhou, L., Wei, G., Wan, J., & Gao, Q. (2025). Digital infrastructure development and regional market segmentation: New evidence from the “Broadband China” policy. Journal of Competitiveness, 17(1), 127-154. https://doi.org/10.7441/joc.2025.01.07
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